Question

Sales were $500,000. The variable cost of goods sold was $300,000. The variable selling and administrative expenses were $75,000. Fixed costs were $60,000. Using variable costing, what is the contribution margin

Answer 1

$125,000

Step-by-step explanation:

The sales were $500,000

The variable cost of goods sold is $300,000

The variable selling and administrative expenses were $75,000

The fixed costs were $60,000

Therefore the contribution margin ratio using the variable costing can be calculated as follows

CMR= Sales revenue-Variable cost of good sold-The variable selling and administrative expenses

= $500,000-$300,000-$75,000

= $200,000-$75,000

= $125,000

Hence the contribution margin ratio is $125,000